The oil and gas group BG has cut the £25m pay deal for incoming boss Helge Lund after shareholders warned that they would vote down the package later this month.

Following a week of relentless pressure from investors and outspoken remarks by the head of the Institute of Directors, the BG board took the unusual step of reducing the share awards to Lund.

The move puts pressure on the chair of the company’s remuneration committee, Sir John Hood, who has been on the board since 2007 and whose committee is thought to have approved the original deal.

The BG board decided on Sunday night to cut the “golden hello” for Lund from £12m to £10.6m – avoiding the need for a formal vote of shareholders at a meeting on December 15.

The meeting had been convened because the original award of shares breached limits under the company’s pay policy, which had been agreed by investors at the annual meeting in May.

The company said the new share award was likely to be worth nearer £4.7m than the £10m it had estimated for the original deal, although the latter could have fetched as much as £12m. The shares will now be linked to the company’s performance, not just Lund’s.

Even with the reduction Lund could get as much as £14m a year on top of the £480,000 relocation allowance he has been given. He is currently based in Norway where he ran Statoil until October, when his appointment to the £30bn FTSE 100 group BG was announced. His basic salary of £1.5m is 30% above that of the bosses of BP and Royal Dutch Shell, its two main London-listed rivals, both worth substantially more than BG.

Lund is due to arrive on 2 March, when chairman Andrew Gould, who has been acting as chief executive since April, has said he will return to a non-executive role.

Legal & General, which owns 2.7% of the company and was one of the first investors to speak out publicly about the share award, welcomed the change. “We are encouraged to see BG responding positively to shareholders’ concerns. As long-term engaged investors we look forward to the new CEO joining and creating shareholder value for all,” said Sacha Sadan, director of corporate governance at L&G.

Royal London Asset Management, which owns 0.6% of the company and had been calling for the vote to be postponed, said it was in “no one’s best interest for this to go to a vote, given the level of opposition”.

Simon Walker, the IoD boss who had branded the original pay award “excessive, inflammatory” and “a red rag to the enemies of the free market” applauded the move. “While substantial, the total remuneration is reduced and now falls within proper limits for a company of BG’s size and international importance. We continue to welcome Helge Lund’s appointment and wish him and BG well in the challenges they face,” Walker said.

BG Group said both its board and Lund realised the change needed to be made. “A significant number of shareholders questioned the structure of the package, in particular whether it was appropriate to go outside the remuneration policy approved by shareholders earlier this year. Both the board and Mr Lund recognise and wish to respond to shareholder concerns,” the company said.

The Investor Management Association had issued a “red top alert” – its most serious warning signal about corporate governance breaches – while rival advisers, including ISS, Manifest and Pirc, united in their condemnation of the deal.